German 2014 Power May Rise on Reverse Candle: Technical Analysis

German power for 2014 delivery may advance 3.2 percent after forming a reversal candle on Feb. 8, according to analysis by FuturesTechs.

Baseload 2014 power, for supplies delivered around the clock, may rise to 43.45 euros ($58.20) a megawatt-hour, Liam Roberts, technical analyst at research and training company FuturesTechs, said from Billericay near London.

“Undoubtedly the trend is still lower but we’re assuming a countertrend rally and period of consolidation is under way following the reversal signal,” Roberts said today by e-mail.

The bullish engulfing candle on Feb. 1 was a sign the trend was turning, Roberts said. A candle chart displays a security’s high, low, open and close for each day, and can signal a reversal of a trend or a continuation.

The price of 43.45 euros represents a 38.2 percent Fibonacci retracement from a Nov. 12 peak of 48.60 euros, according to Roberts. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low.

German 2014 power fell 0.5 percent to 42.10 euros a megawatt-hour at 12:31 p.m. in Berlin, according to broker data compiled by Bloomberg.

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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